PLEASANT GROVE MISSIONARY BAPTIST CHURCH OF RANDOLPH COUNTY INC v. State Farm Fire and Casualty Company, No. 4:2011cv00157 - Document 15 (M.D. Ga. 2012)

Court Description: ORDER denying 10 Motion to Compel. Ordered by Judge Clay D. Land on 06/04/2012. (CGC)
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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION PLEASANT GROVE MISSIONARY BAPTIST CHURCH OF RANDOLPH COUNTY, INC., * * Plaintiff, * CASE NO. 4:11-CV-157 (CDL) vs. * STATE FARM FIRE & CASUALTY COMPANY, * * Defendant. * O R D E R In this insurance dispute, Plaintiff Pleasant Grove Missionary Baptist Church of Randolph County (“Pleasant Grove”) seeks production of certain documents created and maintained by employees of Defendant (“State Farm”). State Farm Fire & Casualty Company State Farm contends that the documents are protected from discovery under the work product privilege. For the reasons set forth below, the Court agrees that the documents are protected work product, and the Court therefore denies Pleasant Grove’s Motion to Compel (ECF No. 10). FACTUAL BACKGROUND Pleasant Grove purchased a church insurance State Farm in 2008 and renewed the policy in 2009. policy Compl. Ex. A, Church Policy Renewal Certificate, ECF No. 1-2 at 21-22. policy contained an “Actual Cash Value from Endorsement,” The which stated that the value of covered property “will be determined at actual cash value as of the time of loss or damage” and that State Farm would not pay more than the smaller of the policy limit or “the actual cash value of the lost or damaged property as of the time of loss or damage.” Compl. Ex. A, Actual Cash Value Endorsement, ECF No. 1-2 at 29. The policy also contained a “Fungus (Including Mold) Exclusion Endorsement,” which stated that a loss due to the growth, proliferation, spread or presence of mold or mildew was not a covered loss. Compl. Ex. A, Fungus (Including Mold) Exclusion Endorsement, ECF No. 1-2 at 31. On February 8, 2010, Pleasant Grove’s pastor, Rev. Roosevelt Zanders, contacted the church’s State Farm agent to report that storms in early January 2010 had blown shingles off the church’s roof sanctuary ceiling. and that there was water damage on the E.g., Def.’s Resp. to Mot. to Compel Ex. A, Dietrichs Aff. ¶ 3, ECF No. 13-1; accord Pl.’s Mot. to Compel Ex. A, Activity Log 8, 2/9/2010 entry, ECF No. 10 at 8. Rev. Zanders first noticed the water damage on the sanctuary ceiling on the first Sunday in January 2010. Dietrichs Aff. ¶ 3. State Farm assigned in-house adjuster Chandler Christie to investigate the claim. Christie inspected the church on March 1, 2010 and made the following entry into State Farm’s activity log on March 3, 2010: 2 Inspected with Mr. Zanders on Monday afternoon. Wind damage to both slopes over the sancurary [sic]. It will need to be reroofed. Interior damage to the ceiling inside. The ceiling will need re-texturing. Explained to insd. Explained RCB and ACV. He understood. Pl.’s Mot. to Compel Ex. A, Activity Log 7, 3/3/2010 entry, ECF No. 10 at 7. Christie determined that the actual cash value of replacing the roof over the sanctuary and repairing the water damage to the interior sanctuary ceiling was $6,267.79. 3/4/2010 entry. Christie issued payment in that Id. at amount to Pleasant Grove on March 4, 2010, and he closed the claim. In late May 2010, State Farm received two identical letters from Rev. Zanders, one dated May 20, 2010 and the other dated May 24, 2010. Def.’s Resp. to Mot. to Compel Ex. B, Letter from R. Zanders to State Farm (May 20, 2010), ECF No. 13-2; Def.’s Resp. to Mot. to Compel Ex. C, Letter from R. Zanders to State Farm (May 24, 2010), ECF No. 13-3. In the letters, Rev. Zanders stated not that Pleasant Grove did evaluation of the church’s loss. agree with Christie’s E.g., Def.’s Resp. to Mot. to Compel Ex. B, Letter from R. Zanders to State Farm (May 20, 2010), ECF No. 13-2. Rev. Zanders also stated that Pleasant Grove had two contractors evaluate the damages. Id. reopened to the file and asked Pleasant contractors’ estimates for review. Grove submit the Pl.’s Mot. to Compel Ex. A, Activity Log 7, 5/21/2010 entry, ECF No. 10 at 7. 3 State Farm Shortly after State Farm reopened the claim, State Farm received an invoice for water extraction from RU Group in Macon, Georgia. Pl.’s Mot. to Compel Ex. A, Activity Log 7, 5/26/2010 entry, ECF No. 10 at 7. dated March 22, 2010. The invoice was for $2,678.28 and was Id. State Farm employee Buffie Marshall contacted Rev. Zanders to ask if the water extraction bill was related to the loss that had been reported on February 8. Rev. Zanders told Marshall that Pleasant Grove had Id. hired a public adjuster named Jay Barnes to handle the matter for the church. Id. State Farm assigned Pleasant Grove’s claim to independent adjuster Laura Martin, who representative Richard Tison. was assisted by senior claims Def.’s Resp. to Mot. to Compel Ex. D, Tison Aff. ¶¶ 8-9, ECF No. 13-4. On June 2, 2010, Tison went to Macon, Georgia to interview someone from RU Group about the water extraction invoice so he could determine whether it was related to Pleasant Grove’s February claim. Id. ¶ 10. When he arrived at the address on the invoice, he found that it was a beauty supply store, but the woman who was working at the store did not know where RU Group was located. Id. ¶ 11; Pl.’s Mot. to Compel Ex. A, Activity Log 6, 6/3/2010 entry, ECF No. 10 at 6. Martin was later able to contact Carlton Pitts of RU Group, who sent State Farm photos of the damage, but the photos were too small to be of use. Pl.’s Mot. to Compel Ex. A, Activity 4 Log 5, 6/8/2010 entry, ECF No. 10 at 5. When questioned about the amount of equipment he used, Pitts stated that he did an “enhanced drying.” Pl.’s Mot. to Compel Ex. A, Activity Log 6, 6/7/2010 entry, ECF No. 10 at 6. Martin also contacted Barnes because Rev. Zanders advised State Farm that public adjuster. Barnes would be acting as Pleasant Grove’s When Martin spoke with Barnes, Barnes said that he was not serving as a public adjuster but as a contractor providing a damage estimate to Pleasant Grove. Def.’s Resp. to Mot. to Compel Ex. E, Martin Aff. ¶ 6, ECF No. 13-5. On June 17, 2010, Martin went to inspect the church, and Rev. Zanders was present for the inspection. Id. ¶ 7. Martin evaluated the damage to the roof and then walked through the inside and around the outside of the building, observing the damage and taking photographs. Id. Martin found “water damaged ceilings in main sanctuary, foyer, secretary office, storage room at front of main bldg., mens bath entry, ladies bath entry, hallway on left of church, Pastor’s office and kitchen at rear of structure.” Mot. to Compel Ex. A, Activity Log 5, 6/18/2010 entry, ECF No. 10 at 5. While Martin was at Pleasant Grove, Barnes came and presented her with his estimate for repairing the church in the amount of $181,260.11. Martin Aff. ¶ 8; Pl.’s Mot. to Compel Ex. A, Activity Log 5, 6/18/2010 entry, ECF No. 10 at 5. 5 Martin reviewed the estimate and found that it was “basically an estimate to renovate and upgrade the entire Church building and not just the damaged roof area and sanctuary ceiling from the windstorm.” Martin Activity 5, Log Aff. ¶ 8; 6/18/2010 Pl.’s entry, ECF Mot. No. to 10 Compel at Ex. 5. A, Martin “realized that there were likely to be some problems with this claim.” the Martin Aff. ¶ 8. “Xact” estimate Martin noted in the activity log that based on her inspection was $9,689.18. Pl.’s Mot. to Compel Ex. A, Activity Log 4, 6/20/2010 entry, ECF No. 10 at 4. Martin contacted Richard Wallace of State Farm’s Special Investigative Unit (“SIU”) to discuss her concerns about the claim. Martin Aff. ¶ 10. SIU “is not normally involved in the investigation of routine property damage claims;” rather, SIU is generally responsible for claims “in regarding the merits of the claim.” Compel Ex. F, Wallace Aff. ¶ 4, Wallace met on June 22, 2010. learned that Pleasant Grove which questions arise Def.’s Resp. to Mot. to ECF No. 13-6. Martin and During that meeting, Wallace had repaired the sanctuary ceiling. not replaced Id. ¶ 8. the roof or Wallace also learned that Barnes had provided the $181,260.11 estimate; Wallace was familiar with Barnes from a previous case and had concerns based on Barnes’s background and on the large increase from Christie’s initial estimate to Barnes’s estimate. 6 Id. ¶¶ 13-14. Wallace discussed the claim with Fire Field Claims Team Manager Randy Ragans, and he recommended that State Farm retain an attorney, Mark Dietrichs, who was familiar with Barnes and who had previously represented State Farm “in the handling of suspicious property reassigned the claim damage to claims.” Tison, who Id. was ¶ to resolve the claim with Wallace’s assistance. 15. Ragans investigate and Id. ¶ 16; Activity Log 3, 6/22/2010 1:41 PM entry, ECF No. 10 at 3. formally retained Dietrichs on June 24, 2010. State Farm Wallace Aff. ¶ 18. On June 23, 2010, Martin started making entries based on her June 17 inspection into State Farm’s “Xactimate program, without regard to whether or not the damage [she] had observed was covered, in an effort to compare and analyze the information calculated by Chandler Christie and Jay Barnes.” ¶ 14. Martin Aff. Martin never completed this task because the claim was reassigned to Tison and Wallace. Id. On August 3, 2010, Tison and Wallace interviewed Carlton Pitts and Doug Watson of RU Group regarding the water extraction invoice. Tison Aff. ¶ 18. Tison and Wallace took a recorded statement from Pitts, and the statement was later transcribed. Id. State Farm retained Randall Peters, engineer, to inspect the church building. 7 a professional Pl.’s Mot. to Compel Ex. F, Def.’s Resp. to Pl.’s 1st Interrogs. 7, ECF No. 10 at 25. Peters “found no evidence of any damage to the roofing system of the church or to any other parts of the sanctuary or church building from wind or other direct weather-related event or any damage from fungal growth associated with any roofing system leakage.” Id. Rather, Peters determined that there was “significant shingle slippage on the sanctuary roof, openings in metal flashing along the leakage on the steeple.” of shingles, equipment, and steeple Id. woodpecker inactive and significant long-term He also observed improper nailing damage, termite water damage infestations. from Id. HVAC Peters concluded that the damage to the ceiling inside the church “had occurred over a long period of time from numerous events.” State Pleasant Farm Grove, has refused contending to that produce the several documents Id. documents are to privileged work product: (1) Laura Martin’s post-June 22, 2010 analysis of scope of damage; (2) Richard Tison’s July 2010 analysis of scope of damage; (3) State Farm’s activity log after June 22, 2010; and (4) the transcript of Carlton Pitts’s interview. Pleasant Grove asserts that the documents are not privileged and should be produced. DISCUSSION “Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation 8 or for trial (including by the or for other another party’s party or attorney, indemnitor, insurer, or agent).” its representative consultant, surety, Fed. R. Civ. P. 26(b)(3)(A). A party seeking “fact” work product—the type of work product at issue here—may discover the materials if the party seeking it shows “that it has substantial need for the materials to prepare its case and substantial cannot, equivalent 26(b)(3)(A)(ii). without by undue other hardship, means.” Fed. obtain R. their Civ. P. The first question for the Court is whether the documents at issue here were “prepared in anticipation of litigation.” If the answer is yes, the Court must determine whether Pleasant Grove has a substantial need for the materials and cannot obtain their substantial equivalent by other means. “The general rule for determining whether a document can be said to have been ‘prepared in anticipation of litigation’ is whether ‘the document can fairly be said to have been prepared or obtained because of the prospect of litigation, . . . (and not) in the regular course of business.’” Carver v. Allstate Ins. Co., 94 F.R.D. 131, 134 (S.D. Ga. 1982) (alteration in original) (quoting 8 Wright & Miller, Fed. Practice & Procedure: Civil § 2024 (1970)). The courts have recognized that insurance company investigating documents may be both “because it is the ordinary course of business for an insurance investigate a claim with an eye toward litigation.” 9 company Id. to The question whether insurance company investigatory documents were “prepared in anticipation of litigation” turns on the facts of the case. Id.; accord, e.g., Allstate Ins. Co. v. Ever Island Elec. Co., Civil Action No. 1:03-CV-3817-JEC, 2007 WL 2728979, at *6 (Sept. 17, 2007). While the early stages of claims investigation is focused not on the contingency of litigation but on whether to pay the claim, at some point, an insurance company’s activity may shift “from mere claims evaluation to a strong anticipation of litigation.” Carver, 94 F.R.D. at 134. At that point, when “the probability of litigating the claim is substantial and imminent,” the insurance company’s investigatory documents are considered work product. Id. For example, in Carver, the court found that diary sheets created by an insurance company employee during initial investigation of a fire loss were discoverable but that diary sheets prepared by insurance company’s investigative unit after the insurance company determined that the fire was suspicious were not. Carver, 94 F.R.D. at 132, 135. Similarly, in Lett v. State Farm Fire & Cas. Co., 115 F.R.D. 501 (N.D. Ga. 1987), the court found that work product privilege applied to documents created by the insurance company’s special investigation unit after the insurance company determined that the loss was caused by a suspicious fire. Lett, 115 F.R.D. at 503; accord Ever Island Elec. Co., 2007 WL 2728979, at *6 (finding that work 10 product privilege applied to documents created after an insurance company referred the claim to its subrogation counsel because an investigator determined that the cause of the fire was a faulty extension cord). Pleasant Grove appears to concede that some of the documents created by State Farm’s employees and agents are work product; Pleasant Grove simply contends that State Farm did not strongly anticipate litigation until September 23, 2010, when Randall Peters inspected the church and concluded that the loss was not due to a single windstorm. See Pl.’s Br. in Supp. of Mot. to Compel 14-15, ECF No. 11 (“Coverage was not in question, and the only issue between the parties was the amount of the damages, finds, until Mr. however, Peters that issued State his Farm report.”). began strongly The Court anticipating litigation on June 22, 2010, after State Farm received Pleasant Grove’s supplemental services that investigation were and claim, which inconsistent also included included with repair water State extraction Farm’s estimates initial that were nearly thirty times the amount State Farm initially paid for the claim related to the damaged roof. Based on those circumstances, State Farm decided to have its investigative unit handle the claim, and State Farm determined that it would be necessary to hire an attorney to help handle the claim. See, e.g., Cordell v. Pac. Indem. Co., No. CIVA 4:05CV167 RLV, 2006 11 WL 3335128, at *3 (N.D. Ga. Nov. 13, 2006) (finding that “proper line of demarcation” was when claim was turned over to special investigations unit based on suspicion that loss was not covered due to arson). Accordingly, the Court concludes that the investigatory documents created by State Farm after June 22, 2010 were prepared in anticipation of litigation, including (1) Laura Martin’s post-June 22, 2010 analysis of scope of damage; (2) Richard Tison’s July 2010 analysis of scope of damage; (3) State Farm’s activity log after June 22, 2010; and (4) the transcript of Carlton Pitts’s interview. The next substantial question need for the is whether materials Pleasant and cannot Grove has obtain a their substantial equivalent by other means. Given that State Farm has Wallace agreed to make Martin, Tison and available for depositions, the Court finds that Pleasant Grove has available to it a method for obtaining the substantial equivalent of the documents that were created in anticipation of litigation. See, e.g., Lett, 115 F.R.D. at 504 (finding that plaintiffs had not established substantial need for work product because they could obtain the facts through depositions of the persons who prepared the privileged reports); Carver, 94 F.R.D. at 136 (same). The Court therefore holds that investigatory documents created by State Farm discoverable. after June 22, 2010 See Rule 26(b)(3). 12 are privileged and not CONCLUSION In conclusion, the Court finds that investigatory documents created by State Farm after June 22, 2010 are protected under Rule 26(b)(3). Therefore, the Court denies Pleasant Grove’s Motion to Compel (ECF No. 10). IT IS SO ORDERED, this 4th day of June, 2012. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 13